Short sellers make $5 billion thanks to Nvidia

Data analysis firm Ortex Technologies said short sellers profited nearly $5 billion when chip company Nvidia’s shares were sold off for three consecutive sessions. During the sessions of June 20, 21 and 24, this code lost up to 13%, blowing away 430 billion USD in capitalization. This happened right after Nvidia surpassed Microsoft and Apple to become the most valuable company in the world last week.

On June 24 alone, when Nvidia shares lost 6.6%, short sellers earned $2.4 billion. This is the largest profit Ortex has recorded since it began tracking short selling activity in 2019.

Short selling means an investor borrows shares to sell at market price, then buys them back in the future to repay them. Therefore, if the price goes down, they will be able to buy it back at a cheaper price and make a profit. But if prices increase, they will lose money. And this number of losses is unlimited.

Some analysts believe Nvidia’s sell-off is due to investors moving away from hot AI stocks and into other sectors, with 2024 already halfway through.

Some analysts have predicted this development. In its assessment on June 19, Bank of America said that “Nvidia stock’s vertical rise makes this code vulnerable if investors sell to take profits.”

However, yesterday session, this code increased again, with 6.7%. Optimists still believe in Nvidia’s central role in the global AI wave. Since the beginning of the year, this code has increased 145% and is the second best performing stock in the S&P 500 index.

Over the past year, Nvidia’s revenue has skyrocketed as a series of technology giants such as Google, Microsoft, Meta, Amazon and OpenAI bought billions of dollars in graphics chips. In the first quarter, Nvidia recorded record revenue of 26.04 billion USD and net profit of 14.8 billion USD. The company expects revenue this quarter to reach 28 billion USD.